Regulations on Securities Lending Transactions by Banks under the Taiwan Stock Exchange Corporation Regulations on Securities Lending

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Regarding the relevant regulations for banks conducting securities lending transactions in accordance with the "Taiwan Stock Exchange Corporation Regulations on Securities Lending," please take note and inform member banks.

2026-08-14

Financial Supervisory Commission Letter

Addressee: As per original and copy copies Date of Issue: August 14, 2026 (Republic of China Year 115) Document Number: Jin Guan Yin Kong Zi No. 1150217619 Priority: Ordinary Confidentiality Level and Decryption Conditions or Confidentiality Period: Attachments: Subject: Regarding the relevant regulations for banks conducting securities lending transactions in accordance with the "Taiwan Stock Exchange Corporation Regulations on Securities Lending," please take note and inform member banks. Explanation:

1. Banks may conduct securities lending transactions in accordance with the provisions of the "Taiwan Stock Exchange Corporation Regulations on Securities Lending"; however, such transactions shall be limited to those conducted for the purposes of hedging, performance, and arbitrage.
2. When banks conduct lending transactions in accordance with the aforementioned Securities Lending Regulations, they must strictly comply with the following regulations: (1) Opening Procedures: Before engaging in this type of transaction, in addition to assessing various potential risks, appropriate risk management mechanisms must be established, including but not limited to operational guidelines for transaction limits, related-party transactions, internal controls, and internal audits, which must be submitted to the Board of Directors for approval before implementation; amendments thereto shall follow the same procedure. (2) Accounting Treatment: In addition to complying with relevant regulations such as International Financial Reporting Standards (IFRSs), the transaction types must be clearly recorded and separately documented from other transactions. (3) Valuation Principles: Positions involved in lending shall be measured daily for fair value together with the original hedging positions, and information regarding such measurements must be retained. If there is no publicly available market quotation, the estimation and measurement of fair value shall be determined in accordance with the fair value hierarchy and applicable valuation techniques set forth in International Financial Reporting Standard No. 13 (IFRS 13). If significant changes occur in fair value movements or key assumptions compared to original expectations, appropriate handling procedures must be in place. (4) Investment Limits and Capital Adequacy Ratio Calculation: During the process of lending transactions, if there are positions that cannot be fully offset or closed out, they shall be included in the calculation of investment limits in accordance with the "Regulations on Types and Limits of Securities Investments by Commercial Banks," and weighted risk assets shall be calculated in accordance with the relevant provisions of the "Explanation and Tables for Calculating Bank's Own Capital and Risk-Weighted Assets."
3. The letter issued by the Council of Financial Supervision on December 22, 1994 (Jin Guan Yin (Six) Zi No. 09460011770) is hereby discontinued from immediate effect. Original Copy: Federation of Banks Association of the Republic of China (Representative Mr. Dong OO) Copy Copies: Taiwan Stock Exchange Corporation (Representative Mr. Lin OO), Securities and Futures Bureau, Inspection Bureau, Banking Bureau of this Commission

Number of Views: 117 Update Date: 2026-08-14

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